It's on marketwatch.com too https://www.marketwatch.com/story/h...eady-for-some-really-scary-moments-2018-11-15
There’s a bubble in corporate credit, according to one of the fathers of the hedge fund industry, but he has no idea what to do about it. “We’re probably in a global credit bubble, global debt bubble,” Paul Tudor Jones II, the founder of hedge fund Tudor Investment Corp. and one of the industry’s pioneers, said at the Greenwich Economic Forum in Connecticut today. The ratio of debt in the world relative to gross domestic product is at an all time high, he said, but “the reason no one talks about it or gets alarmed is you could have said that virtually every year for the past century. “I don’t know whether we’re supposed to run for the exits. But we are at a point in time that’s really challenging to that paradigm of ever-growing debt relative to the carrying capacity.” Since the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire, in 1944, debt levels have expanded because of an “economic circle of trust,” he says, “built upon central banks that began to coordinate with each other.” That persisted through the financial crisis. But those foundations are “cracking.” Central-bank policies have been diverging in recent years. After threatening to rise for the better part of the last decade, the yield on U.S. Treasuries have actually climbed in 2018, helped along by the Federal Reserve boosting its benchmark rates. The benchmark 10-year yield is above 3%, from 2.4% at the start of the year. Jones said valuations for stocks, real estate, and corporate credit are all too high. “We’ve had liquidity absolutely dry up in so many markets,” he said. Corporate credit trading liquidity is about 15-20% what it was at the turn of the century due to “regulatory changes and the move toward passive funds,” he said. “You hollowed out the risk taking ability of the market. So we’re going to probably, on this run, stress test our whole corporate credit market, for the first time. From a market perspective, it’s going to be interesting....There probably will be some really scary moments in corporate credit.” He forecast that credit investors will get stuck in trades, especially in distressed debt, “because the market’s shut off.” But, he added, even though “valuations [in 2007] were very similar to where they are right now,” that isn’t a blueprint and it doesn’t mean a correction is imminent. Other times when the Fed stopped hiking rates, stocks continued to march higher. “Stocks are intriguing because even though we’re going to have challenging economic times, probably,” he said, with slower growth going into next year, “it doesn’t necessarily mean we have to enter a bear market yet. But every time is different.”
Great quote all of it; wonder if he is worried about short sellers+ short sellers thru corps borrowing money??. Most likely not ?? I'm not; short sellers help fuel uptrend. He maybe right on ''stocks, RE, corp credit are all to high.'' But not likely SPY+ QQQ stocks are as badly run as GE. He had a great bear note on GE............He may have understated RE risk in NY?? But I'm sure he knows NY, RE ,better than me.Disagreement on some stuff is not disrespect. Great quote.